A Goods and Services Tax in a federal structure by very nature is complex. The GST system in India tries to minimize the complexity by applying a common base and rate across the country.
... Exibir mais + However, the multiple rate structure and an enforcement framework using onerous reporting requirements for businesses places a huge compliance burden on businesses especially SMEs and is having a negative impact on the economy. The government could reduce the compliance burden on SMEs by providing a longer transition period for them to be part of the full GST requirements. Exporters are facing significant shrinkage in their working capital under the new system which is restricting their ability to take in new orders. Reducing the cash flow burden on exporters and reducing cases of refunds would require immediate policy interventions. The economic impact of the new system will last for at least a few months until businesses can comply with the new system. The additional cost of compliance and the higher tax compliance is likely to render some marginal businesses unviable which would have real economic impact on investment and jobs. However, over time, the benefits of the implementation in the form of positive economic benefits such the removal of tax restrictions on free movement of goods across the country and higher tax collection will over time make up the temporary slowdown. In the interim, the government would need to take additional measures to address these issues of potential slowdown to the economy and minimize any additional compliance burdens on businesses especially SMEs.
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